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Suze Orman: It ‘Makes Absolutely No Sense’ To Prioritize Traditional Retirement Savings If You Live Paycheck-to-Paycheck - Yahoo Finance

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Source: https://finance.yahoo.com/news/suze-orman-makes-absolutely-no-160059682.html

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Stephen Lovekin / Getty ImagesIf you’re in a place where you’re not making a high income but still want to work toward meeting your long- and short-term financial goals, it’s difficult to know where to start.Should you prioritize paying off debt?Saving for the short term?Saving for the long term?Read: 5 Places To Retire That Are Just Like Florida But Way CheaperDiscover: The Simple, Effective Way To Fortify Your Retirement MixSuze Orman, money expert and co-founder of emergency savings startup SecureSave, shared her best advice for how to prioritize your financial goals — including why funding a traditional retirement account should not be at the top of your list.Start by Creating an Emergency Savings FundNo matter what financial situation you are in, your first goal should be to build up an emergency fund, Orman said.Even if you have credit card debt, this should be your priority so that you don’t have to take on more credit card debt if an emergency expense arises.Social Security Cuts: 5 Ways Boomers Should Prepare for the Upcoming Cost of Living Adjustment ChangesContribute to a 401(k) Up to the Employer MatchIf you have access to an employer-sponsored retirement savings account and a match is offered, contribute enough from each paycheck to get the employer’s match. If a match is not available, skip ahead to paying off credit card debt.Pay Off Credit Card Debt“With inflation having driven up the Fed rates, [this] has had a direct result on the interest rate that the credit cards are charging you on the credit card debt, so you’ve got to get rid of that,” Orman said.Save for RetirementOnce you have an emergency fund and your credit card debt is paid off, you can start contributing more than just your employer match to your retirement savings.“You want to designate as much as you possibly can to a retirement account, but if and only if you’re totally out of credit card debt,” Orman said.However, if you are not a high-income earner, you may be better off putting any leftover funds into a Roth account instead of a traditional retirement account.“If you’re living paycheck to paycheck or you’re not in a very high-income tax bracket, it makes absolutely no sense to do a traditional retirement account where you’re getting a tax write-off — you don’t even need a tax write-off,” Orman said.“What you need is accessibility to funds without a penalty.”More From GOBankingRates10 Best Canadian Cities To Retire on a Budget of $2,500 a MonthWhich Bank Gives 6% Interest on Savings Accounts?3 Things You Must Do When Your Savings Reach $50,000This Mistake Can Tank Your Credit Score 100 Points OvernightThis article originally appeared on GOBankingRates.com: Suze Orman: It ‘Makes Absolutely No Sense’ To Prioritize Traditional Retirement Savings If You Live Paycheck-to-Paycheck

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